Dubai has always held the reputation of being the best place for entrepreneurs to start their journey towards establishing a successful business. With a robust business plan and the right support from the best business setup consultants in Dubai, your entrepreneurial dream could take wings. However, every effort in this regard becomes a success only if you meticulously follow the procedures and regulations in Dubai. As per the regulations, obtaining a trade license is the most critical requirement for every entrepreneur to set up a business in Dubai mainland.
The Department of Economic Development (DED) is the competent authority that issued trade licenses in Dubai and the authority has stipulated certain procedures to obtain the license. Before venturing out with the procedure of business setup in Dubai, you must know the different types of trade licenses issued by the DED.
What are the Major Types of Trade Licenses in Dubai?
The procedure of obtaining a trade license in Dubai mainland is a fairly long one and entrepreneurs need to have a strong grasp over the DED regulations regarding each step in the process. The DED issues mainly three types of business licenses and each of them is related to the type of business activity you are allowed to conduct in Dubai mainland. The three types of trade licenses issued by the DED are
- Commercial
If you are planning to set up a trading business in Dubai, then applying for a commercial license is mandatory. By definition, a commercial license is issued to the companies that conduct activities that need capital to be practiced. A commercial activity including wholesale and retail trading comes under the commercial license. The Limited Liability Company (LLC) business setup in Dubai, which is engaged in trading activities operates with a commercial license.
- Professional
The DED issues professional license for the companies that are engaged in service-oriented businesses like consultancy services. Unlike the LLC business setup in Dubai, the professional license comes with the benefit of 100% ownership if a registered local service agent is appointed. The professional license is mandatory for consultants, auditors, accountants, and artisans to set up a business in Dubai.
- Industrial
The businesses that intend to conduct industrial activities like manufacturing in Dubai should obtain an industrial license from the DED. However, the investors may require approval from various government bodies for establishing an industrial business setup in Dubai. The industrial license, as per the DED definition, is issued to companies that convert raw materials into finished goods.
The Process of Obtaining a Trade License in Dubai Mainland
The process of obtaining a trade license in Dubai involves a series of requirements, which can be fulfilled without delay if you hire reputed business setup consultants in Dubai. The following are the mandatory steps to be followed in order to get the trade license issued from the DED.
- Identifying a Business Activity
As a first step, every entrepreneur needs to choose the business activity that is associated with the legal structure of the company. The DED has listed around 2,000 activities that can be categorized into professional, commercial, and industrial. Determine the business activity properly as conducting the business on activities not allowed in the trade license in Dubai attracts heavy penalties.
- Approval for special activities to be obtained from the regulatory authorities
Certain business activities are special (legal, audit, banking, transportation, insurance, tourism, engineering, oil and gas etc) hence approvals from the concerned regulatory ministries other than the DED is required. If you are setting up a restaurant or cafeteria business you need to secure NOC from the Food Safety Department and approval from Dubai Municipality. For setting up a hospital in Dubai, the approval from Dubai Health Authority is required. Consulting the best business setup services in Dubai would let you have a clear understanding of the concerned regulatory bodies. Such business setup consultants will act on your behalf to secure approvals from the government departments.
- Determining the Legal Structure of the Company
The legal structure of the legal form of the company is the type of company you are planning to set up in Dubai. The decision on the legal structure needs to be taken after considering the business type, business activity, the number of owners, and ownership options. The LLC is the most popular type of company formation in Dubai mainland, where the foreign owner holds 49% of the share while a local sponsor (UAE national) should hold at least 51% share in the company. Other forms of business setup in Dubai include the branch of a local or foreign company, representative company, etc. Determining the legal structure requires meticulous study and research, for which the assistance of the best business setup services in Dubai comes handy for the entrepreneurs.
- Choosing a Company Name
The entrepreneur should reserve a trade name for the company right after determining the legal structure. There are strict trade name guidelines in Dubai for choosing a name for the business. Business setup consultants in Dubai recommend that the trade name should be associated with the business activity and legal structure of the company. This would prevent consumers from having confusion over the services offered by the company in Dubai.
- Apply for Initial Approval
To have a smooth process of business setup in Dubai, you must need to obtain an initial approval certificate from the DED. Reputed business setup services in Dubai take care of the initial approval application on behalf of the entrepreneurs with proper documentation. The initial approval certificate is necessary for proving that the DED has no objection against the entrepreneur setting up a company in Dubai.
- Rent an Office Space
It is important to note that the DED mandates that the companies operating in Dubai mainland need to have a physical address. So, you must set up an office in a preferred location in Dubai by renting a suitable space. It is not possible for foreign investors to own properties in Dubai and for renting the office space they should sign a tenancy contract with the landlord. The contract should be registered with Ejari for attestation. Renting an office space in Dubai is not a tough task if you have already hired reliable business setup services in Dubai.
- Obtain Approvals If Applicable
Certain business activities require special approvals from the concerned government authorities other than the DED. If you are setting up a restaurant or cafeteria business you need to secure NOC from Food Safety Department and approval from Dubai Municipality. For setting up a hospital in Dubai, the approval from Dubai Health Authority is required. Consulting the best business setup services in Dubai would let you have a clear understanding of the concerned regulatory bodies. Such business setup consultants will act on your behalf to secure approvals from the government departments.
- Issuance of Trade License in Dubai
In the last stage of the process, you need to submit all the documents and approval certificates to the DED. The fee for the trade license should also be submitted along with the required documents. The DED will issue the trade license with which you can start your dream business in Dubai.
How Business Setup Consultants can Help you Obtain a Trade License in Dubai?
You need to have a trade license issued by the DED to set up any business in Dubai. As mentioned in the article, the process of obtaining a trade license in Dubai consists of certain mandatory steps, and the expert assistance of experienced business setup consultants is required to successfully execute each step. The best business setup consultants in Dubai have an in-depth knowledge about the local laws and regulations, which is necessary to establish a business. Errors committed in any stage of the business process in Dubai would delay the issuance of trade license and therefore the guidance of business setup services in Dubai is critical for you. Choose the right company formation services in Dubai and achieve your business goals in the peace of mind.
